Santander UK saw an exodus of savers in the first half of 2023 even though it offers some of the best rates of the so-called major high street lenders.
Deposits decreased by £5.8bn to £190.7bn in the six months to end June 2023, something it attributed to “increased market competition”.
Santander, along with its big four rivals, has repeatedly been accused of dragging its feet when it comes to raising savings rates in line with base rates, especially given the speed with which mortgage rates have gone up.
Unlike Lloyds, which also reported today, Santander UK said credit quality had improved in the past six months with impairments down by 11%.
Mortgage applications were fewer, though, which it said was due to the challenges faced by households and businesses.
Mortgage arrears did rise slightly but the bank said the level was still below pre-Covid levels.
“We know that the ongoing volatility in the mortgage market and continuing inflationary pressures are creating challenges,” said Mike Regnier, the bank’s chief executive.
Interim profits climbed 18% to £1.2bn from £993mln, while Spain-based Santander Group profits rose by 7% to €5.2bn.